Bangladesh’s pharmaceutical industry is facing mounting pressure as the ongoing US-Israel war on Iran disrupts global supply chains, threatening the availability of raw materials, pushing up freight costs and raising concerns over production stability.

The issue was highlighted at the inaugural session of the 17th Asia Pharma Expo 2026 and Asia Lab Expo 2026, held at the Bangladesh-China Friendship Exhibition Center in Dhaka’s Purbachal yesterday.

Health Minister Sardar Md Sakhawat Hossain, who inaugurated the three-day exposition as the chief guest, said the government is closely monitoring the evolving situation and stressed that ensuring access to quality medicines remains a top priority.

He also reiterated a zero-tolerance stance on corruption and irregularities in the sector.

Industry leaders said the Gulf region unrest has already started to affect the import of active pharmaceutical ingredients (APIs) and other essential inputs, many of which rely on complex shipping routes through the Middle East.

“The war has disrupted logistics, increased freight costs and caused shipment delays,” said Abdul Muktadir, president of the Bangladesh Association of Pharmaceutical Industries (BAPI).

“Rerouting of sea and air cargo is making imports more expensive and unpredictable.”

The disruption is particularly significant for Bangladesh, which remains heavily dependent on imported raw materials despite its strong domestic manufacturing base. Prolonged instability could drive up production costs and put pressure on medicine prices in the coming months, industry insiders said.

According to BAPI, the industry now meets nearly 98 percent of domestic demand and exports medicines to more than 120 countries, reflecting steady expansion over the past decade.

Bangladesh currently exports around $300 million worth of medicines annually and is emerging as a growing player in the global pharmaceutical market.

However, sustaining this momentum will depend on the sector’s ability to navigate external shocks and ensure an uninterrupted supply of inputs.

Muktadir stressed the urgency of accelerating the development of a domestic API industry to reduce reliance on imports.

“The current situation highlights our vulnerability. Policy support is essential to strengthen local capacity,” he said.

He warned that if the conflict persists, rising freight costs and supply uncertainties could erode profit margins and disrupt production cycles, with smaller manufacturers likely to face greater pressure.

Despite the challenges, Bangladesh has so far managed to keep medicine prices relatively lower than in neighbouring countries, supported by strong local production and regulatory oversight, he added.

Md Shameem Haidar, director general of the Directorate General of Drug Administration, said the industry continues to maintain quality and effectiveness, although global disruptions pose new risks.

Industry insiders estimate the market size has already exceeded $3.5 billion, which could surpass $6 billion by 2026, driven by annual growth of 15 to 18 percent.

However, they cautioned that geopolitical tensions could test the sector’s resilience in the near term.

Economists have urged the government to adopt a conservative approach in preparing the upcoming budget for the next fiscal year, taking into consideration the impact of the US-Israel war on Iran, implementing electoral pledges, and boosting investment.

The call came at the first pre-budget meeting with Finance Minister Amir Khosru Mahmud Chowdhury and senior officials of other relevant government agencies at the state guest house Padma on Saturday night.

Among the economists, Salehuddin Ahmed, former finance adviser to the interim government, Debapriya Bhattacharya, distinguished fellow of Centre for Policy Dialogue (CPD), Fahmida Khatun, executive director of CPD, Selim Raihan, executive director of the South Asian Network on Economic Modelling (Sanem), and Zakir Ahmed Khan, former finance secretary, were present.

Speaking to The Daily Star, they noted that the first budget of the new government is crucial, as it will set the trajectory for how the economy will be managed over the next five years.

While Bangladesh’s budget preparation process typically begins in August-September, they said this budget should not be a routine exercise. Instead, it must reflect electoral commitments, prevailing global and domestic challenges, and long-term economic goals.

The economist pointed out that ongoing geopolitical tensions in the Middle East could exert multifaceted pressure on Bangladesh’s economy.

Volatility in global oil markets may drive up import costs, while the risk of supply disruptions remains. This could increase the burden of fuel subsidies, posing a significant challenge to budget implementation.

At the same time, remittance inflows may face headwinds if employment opportunities shrink or incomes decline for migrant workers in the region.

Against this backdrop, several economists underscored that there is little room for overly optimistic assumptions in budget planning. Instead, expenditure frameworks must reflect realistic revenue mobilisation capacity, pressures on foreign exchange reserves and inflation risks.

According to meeting sources, the finance minister brought up long-standing concerns over lack of transparency, cost overrun, and project selection and implementation during the meeting.

He sought suggestions regarding these concerns from the economists.

Economists, in response, suggested including a low number of projects in the budget to ensure smooth implementation.

They also stressed the need to strengthen, streamline and ensure accountability in the formulation of the Annual Development Programme (ADP).

Without addressing these weaknesses, they cautioned, the effectiveness of public investment will remain limited.

No move should be taken to reduce the policy rate at this stage, most economists suggested, as inflation remains high and could intensify further with rising energy and import costs.

Sharing his experience as adviser of the previous interim government, Salehuddin Ahmed stressed that balancing political commitments with economic realities remains a key challenge. He suggested continuing the reform initiatives.

Referring to family cards and expanded safety net schemes, economists suggested streamlining the existing social safety net programmes alongside those electoral promises.

They also called for prioritising restoring confidence in the private sector, stressing the need for improving the investment climate, ensuring policy continuity and reducing administrative bottlenecks.

In the current uncertain environment, investors remain cautious, making it crucial for the government to provide clear and credible policy signals, they noted.

Tax reform featured prominently in the discussion. Structural weaknesses in the National Board of Revenue (NBR), limited tax collection capacity and persistent tax evasion were identified as major concerns.

Economists stressed that expanding the tax base and undertaking administrative reforms are essential for improving revenue mobilisation. They also called for modernisation, greater automation and enhanced accountability within the NBR.

Rashed Al Mahmud Titumir, economic adviser to the prime minister, Md Mostaqur Rahman, governor of Bangladesh Bank, and Md Khairuzzaman Mozumder, secretary of the Finance Division, Monzur Ahmed, member of the General Economic Division of the Planning Commission, Nazma Mobarek, secretary of the Financial Institutions Division, and AK Enamul Haque, director general of Bangladesh Institute of Development Studies (BIDS), were also present at the meeting.

Bangladesh can absorb the economic shocks stemming from the ongoing Middle East war for the next few months, as it holds adequate foreign exchange reserves to meet rising import bills despite higher energy prices, central bank governor Md Mostaqur Rahman said today (29 March).

In a view-exchange meeting with senior journalists, the newly appointed governor expressed cautious confidence in the country's external position.

He, however, maintained a firm stance on monetary policy, stating that cutting interest rates would be "unwise" at this stage due to persistently high inflation, prioritising price stability over short-term growth.

The governor also pledged to keep the financial sector free from political influence and to strengthen rural economic activities as part of broader efforts to stabilise the economy.

Deputy governors echoed similar views at the meeting. Deputy Governor Md Kabir Ahmed said Bangladesh's gross foreign exchange reserves currently stand at around $35 billion, sufficient to cover several months of import payments.

"Moreover, the Bangladesh Bank expects about $1.5 billion in loan disbursements from the International Monetary Fund by June and is working to secure another $2 billion credit line to ease pressure on the balance of payments," he said.

BB governor holds talks with IMF on advancing loan programme

The governor said the government is seeking cheaper fuel through bilateral deals or direct grants from leading oil exporters. Consequently, the prime minister's foreign affairs adviser is visiting various nations to negotiate these terms.

Furthermore, the Economic Relations Division (ERD) has finalised a $1 billion budget support package from the Asian Development Bank (ADB), said the governor.

However, senior executives at the central bank fear that a prolonged war could trigger significant economic risks and inflationary pressures.

Deputy Governor Habibur Rahman noted that with crude oil prices having now nearly doubled, import costs are expected to rise proportionately.

"In this regard, if the safety of Bangladeshi vessels navigating the Strait of Hormuz can be guaranteed, it will be possible to reduce these additional costs," he said.

The governor, however, said the fuel imports Bangladesh procures under long-term G2G (government-to-government) agreements are sourced at the rates specified in those contracts. He added that the government's efforts are ongoing to ensure that these essential supplies continue uninterrupted.

Bangladesh Bank spokesperson Arief Hossain said a significant number of migrant workers in the Middle East risk losing their jobs and are returning home, raising concerns about a decline in remittances.

He also said, "If the IMF imposes conditions on the government to eliminate fuel subsidies, Bangladesh will have to comply. In such a scenario, inflation could surge significantly."

BB pauses dollar purchase to avoid exchange rate volatility as Iran war fallout looms

Bangladesh Bank officials noted that despite these stringent conditions, failing to secure the IMF loan would jeopardise the country's ability to obtain further credit from the World Bank and the ADB.

Deputy Governor Zakir Hossain Chowdhury said if international fuel oil prices continue to rise over a prolonged period, it will create additional subsidy pressure on the government.

Deputy Governor Kabir Ahmed said he anticipates that import demand would remain subdued this monsoon as well, which will play a vital role in maintaining the stability of both the reserves and the exchange rate.

Highlighting the priorities of the Bangladesh Bank, the governor said ensuring that the financial sector remains free from political influence is the top priority.

"The second priority is the recovery of stolen assets, for which meetings are being held every few days. Most banks have already signed non-disclosure agreements, and the remaining ones are expected to follow suit," he said.

The governor noted that unless GDP growth reaches 5% or higher, it will be difficult to attract foreign investment. To generate employment, the disbursement of loans from a Tk600 crore startup fund is set to commence this coming June, he said.

Furthermore, steps will be taken to stimulate demand in rural areas to keep the economy dynamic through increased domestic consumption, said the governor.

Lending banks have also been instructed to take the necessary measures to reopen factories that were closed either during or before the tenure of the interim government, he said.

The governor said, "We are working to decentralise Bangladesh's banking sector; specifically, banks will be instructed to increase loan disbursements towards agri-based industries and agri-technology.

"We are also considering the formation of a subsidy fund for the SME sector. Our reserves are currently in a safe zone, and we do not intend to see any significant depreciation of the exchange rate."

Stating that there is no scope to retreat from the establishment of the Sammilito Islami Bank, the governor affirmed that its operations will be expedited. "The chairman and managing director will be appointed soon, and I am adamant that this new bank remains entirely free from any political influence," he added.

Noting that the Bangladesh Bank held a meeting with the country's leading industrial conglomerates last Wednesday to understand their challenges, the governor stated that any issues pertaining to the central bank would be resolved.

The governor announced that a single, standardised QR code for all financial transactions will be established across the country by 30 June. "The use of this Bangla QR will become mandatory from 1 July."

He added, "This initiative aims to accelerate cashless transactions, which in turn will play a vital role in boosting revenue collection."

Commerce Minister Khandakar Abdul Muktadir has urged the continuation of special support measures for a defined period after countries graduate from the Least Developed Country (LDC) category to help maintain economic stability.

Speaking on the third day of the ongoing WTO Ministerial Conference, the minister participated in various thematic sessions and emphasised Bangladesh's position on key global trade issues, including WTO reforms.

He also called for the adoption of an LDC graduation-related package at MC14 to support countries like Bangladesh in the post-graduation phase.

Muktadir stressed the importance of ensuring an effective, predictable, and rules-based dispute settlement system, called for the prompt restoration of a fully functional two-tier dispute settlement mechanism, including the revival of the Appellate Body, noting that a strong and impartial system is essential to safeguard the interests of developing and LDC countries.

On fisheries subsidies, the minister highlighted that Bangladesh's contribution to harmful subsidies is close to zero, while major fishing nations account for the bulk, urged stricter discipline on harmful subsidies alongside ensuring Special and Differential Treatment (S&DT) for developing and LDC countries.

He also called for full exemption for small-scale and marginal fishers to ensure fairness and sustainability.

At the conference, Bangladesh announced its accession as the 129th member to the Investment Facilitation for Development Agreement, marking its first participation in a plurilateral agreement under the WTO framework.

The minister expressed hope that this move would improve Bangladesh's investment climate and send a positive signal to foreign investors.

The step was welcomed by several partners, including the European Union, Japan, Korea, the United Kingdom, and Hong Kong.

On agriculture, Muktadir underscored the sector's critical role in ensuring food security, livelihoods, and poverty reduction, called for the swift resolution of long-standing issues such as public stockholding, special safeguard mechanisms, and trade-distorting subsidies by developed countries. He reiterated that S&DT must remain central to agricultural negotiations.

Reaffirming Bangladesh's strong support for the LDC package, the minister emphasized the importance of a smooth and sustainable transition, said special benefits should continue for a specified period after graduation to help maintain economic stability and urged adoption of the package at MC14.

Bangladesh also supported extending the moratorium on non-violation and situation complaints (NVSCs) under the TRIPS Agreement until the next ministerial conference. The minister noted that such complaints could undermine policy space for developing countries, particularly in areas like public health and education, and called for a permanent solution.

He further said WTO reform efforts must be grounded in its core principles of transparency, inclusiveness, and fairness, adding that adherence to these values would help preserve trust and credibility in the multilateral trading system.

The minister reaffirmed Bangladesh's commitment to a fair, inclusive, and development-oriented multilateral trading system, expressing hope that MC14 outcomes would guide future reforms while ensuring the interests of developing and LDC countries are protected.

The International Monetary Fund (IMF) announced on Friday that it has reached a staff-level agreement with Pakistan to unlock a new $1.2 billion package as part of its support programmes for the country.

The South Asian nation is one of the largest debtors to the IMF after Argentina and Ukraine.

The IMF in a statement praised the Pakistani authorities’ commitment to “pursuing sound and prudent macroeconomic policies to preserve the recent gains in macro-financial stabilisation, while deepening structural reforms to accelerate growth and strengthening social protection to mitigate the impact of volatile energy prices on the most vulnerable.”

The disbursement is subject to approval by the IMF Executive Board, according to the fund’s statement.

Thailand has reached an agreement with Iran to allow Thai oil vessels safe passage through the Strait of Hormuz, the Southeast Asian nation's Prime Minister said on Saturday.

"An agreement has been reached to allow Thai oil tankers to transit safely through the Strait of Hormuz," Thai Prime Minister Anutin Charnvirakul said at a press conference, adding the development would alleviate concerns over fuel imports.

The International ​Monetary Fund and Pakistan has ‌reached a staff-level agreement on the South Asian nation's loan program, a ​key step toward unlocking $1.2 billion ​in funding, the fund said ⁠on Friday.

The agreement, which requires ​IMF board approval, would give Pakistan ​access to $1 billion under the Extended Fund Facility and $210 million under the Resilience ​and Sustainability Facility, bringing disbursements ​under the ongoing program to $4.5 billion.

Under the $7 billion ‌program, ⁠the Washington-based lender is urging Islamabad's policymakers to keep monetary policy tight and data-dependent to anchor ​inflation expectations ​and ⁠strengthen external buffers.

Pakistan's central bank kept its key ​policy rate unchanged at 10.5% this ​month, ⁠pausing its rate cuts as rising global energy prices and regional ⁠tensions ​pose new inflation ​risks for the import-dependent economy.

Persistent delays in claim settlements by major general insurers are eroding public confidence in Bangladesh's insurance sector, as official data show insurers paid just 9.37% of total claims in the final quarter of 2025.

Data from the Insurance Development and Regulatory Authority (IDRA) show general insurers settled only Tk372 crore out of claims worth Tk3,971 crore filed between October and December 2025.

Industry analysts said the massive backlog highlights deep structural weaknesses, including limited financial capacity, poor liquidity management and operational inefficiencies.

Sadharan Bima settles just 3.41%

Among the largest insurers, the state-owned Sadharan Bima Corporation recorded the highest volume of pending claims. During the quarter, it faced claims totalling Tk2,264 crore but settled only Tk77 crore, representing just 3.41% of the total. As a result, Tk2,187 crore remained unsettled.

A senior official of the corporation, speaking on condition of anonymity, said the organisation is trying to resolve claims but faces structural obstacles that slow the process.

He said roughly 80% of delays occur because survey reports – crucial documents used to assess damage after accidents or disasters – are often submitted late.

The problem is particularly severe for reinsurance-related claims. In some cases, survey reports take five to seven years to arrive, making it impossible to complete final settlements, he said.

"Without these reports, the corporation cannot settle claims with foreign reinsurers, which in turn delays compensation for policyholders," the official added.

He warned that unless the survey system becomes faster and more efficient, the settlement crisis will persist across the general insurance industry.

Private insurers also lag

During the October-December quarter, Green Delta Insurance settled only Tk13 crore out of Tk342 crore in claims, leaving around Tk330 crore unresolved. Its settlement rate stood at just 3.67%.

Despite the low settlement ratio, the company declared a 27% cash dividend for shareholders in 2025, drawing criticism from policyholders who said firms prioritise shareholder returns over client payments.

Reliance Insurance faced similar criticism. It settled Tk20.41 crore out of Tk161 crore in claims during the quarter, leaving Tk141 crore pending, yet approved a 30% cash dividend.

Other insurers also showed weak performance. Pragati Insurance had Tk200 crore in claims but resolved only Tk17 crore, while Peoples Insurance settled just Tk0.52 crore out of Tk89 crore. Northern Islami Insurance paid Tk1.7 crore against claims worth Tk70.92 crore.

A senior official of Green Delta told TBS that delays often occur because policyholders fail to submit complete documentation. Many file claims on time but do not provide proof of loss, police or fire service reports, survey assessments, ownership papers or invoices.

Incomplete or incorrect paperwork complicates verification and can delay settlements for months, he said, adding that disputes over claim amounts are another factor.

"When policyholders demand compensation exceeding the insurer's assessed loss, disagreements often lead to arbitration or legal proceedings, prolonging the process," he added.

Claims involving uninsured risks also create complications, he said. In some cases, policyholders file for losses not covered under policies, including damages from political unrest, certain natural disasters or gradual asset deterioration.

"Such cases require reassessment and explanation, which extends settlement timelines," he explained.

Weak enforcement, lack of accountability

Experts said documentation issues alone cannot explain the scale of the problem. They argued that weak regulatory enforcement and a lack of accountability allow insurers to delay payments with little consequence.

The IDRA has faced criticism from industry observers and consumer groups for failing to take strong action against companies that consistently postpone settlements.

The delays are particularly damaging in the non-life sector, where timely compensation is critical for businesses and individuals recovering from accidents, fires or natural disasters. When claims remain unpaid for months or years, policyholders are often forced to absorb losses, causing severe financial stress.

By law, insurers must settle valid claims within 90 days. In practice, industry sources said this rule is frequently ignored.

Role of reinsurance provider

Another structural factor behind the delays is the role of the state-owned reinsurer, Sadharan Bima Corporation. Under current rules, general insurers must reinsure 50% of their risk exposure with the corporation, while the remainder can be transferred to foreign reinsurers.

Industry insiders said delays by the state reinsurer in settling its share often prevent primary insurers from paying policyholders on time, trapping the process in a complex chain involving surveyors, insurers, reinsurers and regulators.

When the entire financial industry has been grappling with high levels of default loans, Alliance Finance, a joint-venture financial institution with Sri Lankan investment in Bangladesh, has managed to keep its default rate within 1% through prudent risk management.

In its first four years of operation, the company recorded no default loans at all, said Kanti Kumar Saha, CEO of Alliance Finance, while delivering his address at an event marking the company's eighth anniversary, held at a city hotel today (28 March).

People's Leasing and Finance, a subsidiary of Sri Lanka's largest state-owned bank, People's Bank, holds a major stake in Alliance Finance. Local sponsors include leading corporates and individuals such as Summit Group, Rangs Group, Alliance Holdings Limited, Green Delta Insurance Company Limited and Concept Knitting.

According to its annual report, the company's loan book stood at over Tk468 crore as of December 2024, while total deposits exceeded Tk432 crore. At a time when most non-bank financial institutions have been struggling to survive amid significant losses, Alliance Finance reported a net asset value per share of Tk11.54 at the end of 2024.

Jowher Rizvi, chairman of Alliance Finance, credited the management team for maintaining the default loan ratio at around 1% despite various challenges, describing it as a significant achievement.

He noted that one of the key factors behind this success was the absence of board-level interference in operational matters. "If you want to successfully run your company, do not allow the board to intervene, which we strictly follow," he said. "As chairman, I do not even have an office room at the company, as board members only attend meetings."

Saha outlined three core strengths of the institution. "Our strengths are mainly three: first, a board comprising highly educated and successful business leaders who have guided the institution to its current position; second, strong liquidity management and an unwavering commitment to depositors to return their funds on time – Alliance Finance has never failed in its commitments to its valued depositors and lenders; and third, a well-trained and experienced workforce capable of navigating challenging conditions," he said.

He further noted that although the industry has been going through a difficult period with very high levels of non-performing loans (NPLs), Alliance Finance did not record any non-performing investments (NPIs) during its first four years of operations. "Although we experienced some thereafter, we have managed to keep it within 1% over the past four years," he added.

"Despite a decline in loan demand for various reasons, Alliance Finance (AFPLC) has maintained its growth trajectory over the years without any major disruptions. The same applies to profitability trends and the continuity of dividend payments to shareholders," he said.

"Alliance Finance has also maintained its long-term credit rating at AA- and short-term rating at ST-2 for the past two consecutive years, despite volatility in the financial sector, during which many companies experienced downgrades."

He expressed confidence that the ratings would improve further in the coming days.

Outlining the company's business strategy, Saha said, "Alliance Finance has entered into various strategic alliances with leading microfinance institutions (MFIs) to reach women and CMSME clients, extending agricultural and sustainable finance in rural areas. It has also signed agreements with various departments of the central bank for refinancing and pre-financing schemes. As a result, more than 20% of AFPLC's funding sources now come from refinancing, which has helped keep our cost of funds low."

He projected that the future of the financial sector would be driven by financial technology (fintech).

"We launched our Core Business Solutions (CBS) two and a half years ago to provide seamless services to our valued customers and to ensure data integrity. We are among the top five finance companies to roll out e-KYC and, more recently, fully digital platforms to facilitate real-time transactions," he said.

"We have already established platforms enabling clients to make payments and collections through mobile financial service operators. As a result, depositors can pay installments and borrowers can settle EMIs quickly via their mobile phones," he added.

Bangladesh has emphasised the need to reform the World Trade Organization (WTO), while cautioning that any such changes must not undermine the body’s fundamental principles.

Commerce Minister Khandakar Abdul Muktadir made the call at the beginning of the 14th WTO Ministerial Conference on March 26 in Yaounde, Cameroon.

The call came as the multilateral trading arrangement faces challenges due to protectionism, particularly the unilateral imposition of tariffs by countries, such as the recent reciprocal tariff slapped by the USA on many nations.

The consensus-based, rules-based multilateral trading arrangement, anchored in non-discrimination and inclusivity, has benefited both developed and developing nations, including Least Developed Countries (LDCs), he said.

He highlighted key mechanisms underpinning the system, including most-favoured-nation (MFN) treatment, duty-free quota-free market access, and special and differential treatment (S&DT) for developing countries and LDCs.

While reform is essential, it should not come at the cost of distorting its fundamental principles, he said.

Speaking to The Daily Star at the sidelines of the conference, Muktadir said the WTO’s rules-based framework has played a key role in reducing global poverty over the past three decades.

The time and effort invested by nations in creating the current framework should not be wasted in the name of reform, he said.

Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, who is also attending the conference, said the dispute settlement mechanism, often described as the “jewel in the crown” of the WTO, has become almost non-functional due to this prolonged deadlock.

Rahman underlined the need to prioritise fixing tariff rates on an MFN basis.

He said that in recent years, developed countries like the US have been fixing tariffs unilaterally above MFN rates under the guise of reciprocal tariffs, causing many countries to lose their competitive edge.

For instance, he said, if Bangladesh applies the American reciprocal tariff formula to reduce its trade deficit with China and India, the rate of import tax could reach as much as 48 percent on imports from China and 42 percent on those from India.

Similarly, Bangladesh could face much higher tariffs from the European Union if reciprocal measures were applied, given its annual exports of over $25 billion to the bloc compared to imports of $6 billion.

Separately, Sheikh Hossain Muhammad Mustafiz, a director of the Bangladesh Garment Manufacturers and Exporters Association, warned of a future cotton supply squeeze.

He said that four African nations, including Benin, plan to invest significantly in utilising their own cotton for domestic textile production by 2040. African countries have become key sourcing destinations as Bangladesh seeks to reduce its over-dependence on India.

Meanwhile, Aissatou Diallo, executive director of the Enhanced Integrated Framework (EIF), Executive Secretariat at the WTO, advised Bangladesh to improve its investment climate and diversify exports ahead of its graduation to a developing nation this November.

She said the EIF would continue providing technical and financial support for five years to enhance the competitiveness of Bangladeshi entrepreneurs.

The government is preparing a revised priority list for foreign-funded projects currently under review in the pipeline to align them with the new administration's election manifesto, according to officials at the Economic Relations Division (ERD).

Since the BNP government assumed office on 17 February, it has placed the highest priority on fulfilling its electoral pledges, already introducing Family Cards and waiving farm loans up to Tk10,000. Its development priorities will be reflected in the annual development programme of the next fiscal year's budget, the first for the new government.

ERD officials say the government will ensure foreign financing alongside allocations from public funds to support the priority projects. As part of this process, foreign-funded projects currently in the pipeline are being reviewed and various ministries have already started their groundwork under guidance from the finance ministry.

ERD figures updated till January show that $2.27 billion in project loan agreements were signed during the first seven months of the current fiscal year.

Over the last few years, Bangladesh has typically signed $9 billion to $10 billion in annual loan agreements to fund its priority development agenda.

But fewer loan projects were signed during the interim government's 18-month term before the February elections, as the administration then preferred mitigating foreign debt risks to signing new projects.

After the new government took office in February, the ERD has begun drafting a revised priority list for the final quarter of this year and the upcoming fiscal year starting in July, aligning to the ruling party's election manifesto.

As of January, loan proposals for projects in the pipeline stood over $46.6 billion, including $18.7 billion from the Asian Development Bank (ADB), $1.8 billion from the World Bank, $15.2 billion from South Korea, $3.8 billion from China, and $911 million from Japan.

Also, there are proposals from Asian Infrastructure Investment Bank (AIIB), New Development Bank (NDB) and European countries.

Shifting priorities

"The projects currently in the pipeline are undergoing a fresh re-evaluation," said an ERD senior official, speaking on condition of anonymity.

Projects are routinely listed in the borrowing programme pipeline after extensive discussions with development partners. From this list, the government signs loan agreements for priority projects each year, the official explained.

ERD officials suggest the new government may drop some projects from the previous era's pipeline, though widespread cancellations are not expected. Since many projects form part of essential sectoral plans – such as the ADB-backed SASEC Dhirasram Inland Container Depot (ICD) – they are likely to be retained.

Major projects in focus

The World Bank's pipeline under the ERD includes six projects, with the Health, Nutrition and Population Sector Development Programme listed among "highly probable" projects.

ERD data shows that the borrowing programme for the current financial year features 43 South Korean-funded projects, including high-impact infrastructure projects such as the Meghna Bridge on the Shariatpur-Chandpur Road, a railway link to the Bay Terminal of Chattogram Port at Patenga, MRT Line-4 and the MRT Line-5 Southern Route in partnership with the ADB.

According to ERD data, there are nine Chinese projects currently in the pipeline, including conversion of Akhaura-Sylhet railway to dual gauge, expansion of the Joydebpur-Mymensingh-Jamalpur rail corridor, modernisation of Mongla Port and the development of the Chinese Economic and Industrial Zone in Chattogram.

Beyond the major lenders, the AIIB maintains a significant presence with $3.543 billion in proposals across 15 projects, while the NDB accounts for $1.06 billion through six initiatives.

For the current financial year, five projects were also slated for loan agreements with Japanese financing, involving a total proposed credit of $911 million.

Zahid Hussain, former lead economist at World Bank's Dhaka office, told TBS that the government must evaluate which sectors should be prioritised and which specific projects within those sectors are the most urgent.

He said in the context of the current global crisis – marked by war, fuel shortages, and supply chain uncertainties – the primary objective must be to maintain economic stability. "Consequently, projects related to food security and energy security should receive the highest priority."

"Furthermore, improving the efficiency of port systems is of critical importance. For sustainable growth, developments in education, healthcare, and technical skills remain indispensable," he stressed.

M Masrur Reaz, chairman of the private research organisation Policy Exchange Bangladesh (PEB), said it is natural for the current government to have its own development and project financing strategies.

While reprioritisation is expected, previous projects, which are vital for economic growth, human resource development, should not be outright dropped from the priority list, he cautioned.

Establishing priorities is not enough, the PEB chairman said. "Financing must be sound, and negotiations with development partners must put the country's interests first. Moreover, we must urgently improve our capacity to actually implement these projects."

Bangladesh is facing intensifying energy-related risks with limited policy flexibility, as global supply disruptions and geopolitical tensions constrain its ability to manage shocks, according to a recent report by S&P Global Ratings.

The report by the American credit rating agency highlights that countries such as Bangladesh, Pakistan, and Sri Lanka -- despite showing some signs of macroeconomic recovery -- remain at “greater risk” due to their heavy reliance on imported fuel and weaker external positions.

“These countries are particularly vulnerable to rising oil prices and potential supply disruptions,” states the report published last week.

Bangladesh faces mounting growth, inflation, and external risks if the spike in energy prices endures longer than currently anticipated, it adds.

The duration of the US-Israel war on Iran and the associated price shock, as well as the physical availability of fuel supplies, will be key determinants of the impact on the sovereign’s creditworthiness, the report notes.

Higher fuel prices are likely to stall the gradual decline in inflation over the next three to six months and could weigh on recovery momentum.

Nearly 50 percent of Bangladesh’s electricity generation is gas-fired, and almost a quarter of its gas needs are met through imports.

Meanwhile, the economy is almost entirely reliant on imports for crude and refined oil products.

Oil supply reserves are likely to last less than one month, after which measures to curb consumption may become more pronounced if imports remain constrained.

While the government and national energy companies have recently secured additional supplies of gas, diesel, and petrol, availability could become scarcer if the conflict continues.

Officials have moved quickly to implement measures aimed at offsetting the impact of higher fuel prices.

These include a cap on retail fuel prices, a temporary rationing mechanism, cuts to operations at fertiliser plants to prioritise gas supply to power plants, and early school closures to manage energy consumption.

The country is already grappling with stubbornly high inflation, which rose to 9.2 percent in February from 8.6 percent in January, and an extended moderation in growth following the collapse of the Awami League-led government in mid-2024.

The war will also be an unwelcome headwind against Bangladesh’s improving external position, notes S&P Global.

It explains that the accumulation of a more meaningful foreign exchange buffer and the current account’s modest surplus so far this fiscal year will help alleviate immediate stresses that could arise from a period of acutely high energy prices.

In addition, lower remittances would have the dual effect of tilting external flows unfavourably and reducing domestic private consumption momentum.

In that event, further delays to Bangladesh’s economic recovery could lead to a significant erosion of the country’s long-term growth rate or a deterioration in its external position, such that net external debt surpasses 100 percent of current account receipts on a sustained basis, the agency warns.

S&P Global notes that Pakistan, Sri Lanka, and Bangladesh are showing signs of economic recovery. The three countries have made progress, but sustained high energy prices and potential disruptions to trade and remittances could derail their fragile economies.

However, it states that Bangladesh—with government revenues at only around 9 percent of GDP—has fewer options to cap electricity and fuel prices through fiscal means.

Laos is comparatively less exposed due to its hydropower-based electricity generation and balanced fiscal position.

All four governments are likely to see significant deterioration in credit metrics—through inflation and currency channels—if the Middle East conflict is prolonged, according to the report.

However, the impact on ratings may be limited, as the generally low rating levels have already captured a significant share of the risks.

Bangladesh’s long-term rating stands at B+, with a stable short-term outlook. The B+ rating reflects the economy’s modest per capita income and limited fiscal flexibility, owing to a combination of low revenue-generation capacity and the government’s high interest burden.

S&P Global concludes, “Our ratings on Bangladesh can likely withstand the shorter-term economic disruptions associated with our base case scenario.”

Nearly a decade after the Bangladesh Bank (BB) reserve heist stunned the world, investigators say they have identified 65 to 70 suspects across seven countries and are now preparing to submit the charge sheet soon.

Among those implicated are about 10 officials of the central bank, according to the Criminal Investigation Department (CID) under Bangladesh Police.

“The long-running probe is now in its final stage,” Al Mamun, the investigation officer and an additional superintendent of police, told The Daily Star.

“We are now preparing the draft charge sheet and hope to submit it soon,” he said.

The development comes after years of delays. Over the past 10 years, the investigation officer has been changed four times, and the submission of the probe report has been deferred more than 86 times.

On February 4, 2016, hackers broke into the BB’s systems and issued 70 fake payment instructions to the Federal Reserve Bank of New York, seeking to withdraw nearly $1.94 billion.

Most of the transactions were blocked by the Fed’s security system. But five slipped through, resulting in the release of $101 million.

Of that amount, $81 million was transferred to accounts at Rizal Commercial Banking Corporation in the Philippines. Another $20 million was sent to Sri Lanka, but was recovered after a spelling error in the transfer request raised red flags.

On March 15, 2016, a case was filed by then BB Deputy Director Zobayer Bin Huda with Motijheel Police Station. The investigation was later handed over to the CID.

So far, Bangladesh has recovered $14.66 million from the Philippines.

On condition of anonymity, a senior CID official said the recovery process has proved complex because the funds were not returned through the same banking channels used for the transfers, complicating legal proceedings.

INTERNATIONAL TRAIL, NEW LEADS

Investigators say the probe gained pace last year after authorities received a report from a US intelligence agency through the Mutual Legal Assistance Request (MLAR) process.

The information helped identify several foreign suspects.

“Without getting information from those countries, it was not possible to complete the investigation properly. Due to delays in receiving responses to the MLAR requests, the investigation took longer,” said Additional SP Mamun.

CID officials say they have gathered information from authorities in China and the Philippines as well.

On September 18 last year, a Dhaka court ordered the seizure of funds from Rizal Commercial Banking Corporation as part of the ongoing investigation.

Investigators said they have traced the laundering of the stolen funds across the Philippines, Japan, North Korea, Sri Lanka, India and China.

They say around 30 individuals and seven companies in the Philippines were linked to the laundering process.

According to investigators, Philippine businessman Kam Sin Wong has been identified as a central figure in the network. Wong allegedly hired North Korean hacker Park Jin Hyok, believed to be associated with the state-backed Lazarus Group, also known as APT38.

The hackers allegedly sent malware-infected links to BB officials by email, gaining access to internal systems and initiating fraudulent SWIFT transactions.

Funds were routed through several intermediaries before being channelled into casinos, including Solaire Resort and Casino and Midas Hotel and Casino. Other entities identified in the laundering chain include Philrem Service Corporation, Centurytex Trading, ABBA Currency Exchange Inc and Beacon Currency Exchange Inc.

In Sri Lanka, investigators traced the attempted $20 million transfer to an account at Pan Asia Bank in Colombo belonging to the Shalika Foundation, led by Hegoda Gamage Shalika Perera.

The transaction failed after the word “foundation” was misspelt, alerting authorities and preventing the funds from being withdrawn.

CID officials say eight individuals and institutions in Sri Lanka have been linked to that attempted transfer.

SCRUTINY OF CENTRAL BANK LAPSES

Investigators are also examining possible lapses within the central bank.

They are reviewing why the Real Time Gross Settlement (RTGS) system was connected directly to the SWIFT network without adequate risk assessment.

They are also looking into the approval process that allowed the SWIFT server used to manage foreign reserves to be linked with the RTGS system under the then-governor Atiur Rahman.

Some BB officials allegedly downloaded malware-infected files without verifying their source, while others are suspected of removing technical evidence after the breach came to light.

CID officials say these issues will be detailed in the charge sheet.

Struggling Z-category companies, especially leasing firms and a few manufacturing entities, led the top gainers' chart on the Dhaka Stock Exchange (DSE) during the first trading week after Eid, which saw only two sessions.

Market insiders said the sharp rises were largely driven by short-term investor interest and speculative trading. Despite ongoing economic uncertainty stemming from the Middle East conflict, some investors showed renewed appetite for weak, closed, and Z-category stocks.

A weekly market review showed that International Leasing & Financial Services, Peoples Leasing & Financial Services, FAS Finance & Investment, and Fareast Finance & Investment each posted a 50% gain. However, their share prices remained low, between Tk3.30 and Tk3.60.

Analysts noted that these financial institutions have long faced losses, high non-performing loans, and capital shortages. "The price spikes do not reflect any improvement in fundamentals but rather a tendency among investors to chase quick gains in low-priced stocks," one observer said.

Premier Leasing & Finance also rose sharply, climbing 42.31% to close at Tk3.70. Analysts believe the simultaneous gains across multiple companies in the same sector point to coordinated buying pressure.

Outside the financial sector, two Z-category textile and manufacturing firms featured among the gainers. Familytex (BD) advanced 27.59%, while HR Textile rose 25% to Tk22. In the food and consumer segment, Meghna Condensed Milk gained 23.61% to Tk35.60, and Meghna PET Industries increased 22.92% to Tk29.50. Prime Finance & Investment climbed 17.39% to Tk5.40, though its rise was also attributed to short-term trading trends rather than any fundamental improvement.

Market analysts said the dominance of financially weak companies reflects structural weaknesses. "When fundamentally weak companies top the gainers' chart, it indicates that investor confidence has not yet fully shifted toward strong, fundamentally sound stocks," one analyst noted.

Meanwhile, the broader market showed signs of recovery. After suffering the steepest single-day fall in six years early in the week, the market rebounded as investors returned to buy stocks at lower prices.

Gradual easing of concerns over the Middle East conflict and domestic fuel supply, coupled with improving investor sentiment, contributed to rising buying pressure and helped market indices recover by week's end

Stocks rebounded today (25 March) at the Dhaka Stock Exchange (DSE), with the benchmark index recovering from the previous session's sharp decline as late-session buying revived investor interest despite lingering global uncertainties.

The benchmark DSEX index gained 31 points, or 0.59%, to close at 5,316, reversing part of Tuesday's (24 March) losses.

The blue-chip DS30 index also edged higher, rising 8 points or 0.41% to settle at 2,019. Market breadth turned positive, with 241 issues advancing against 102 decliners, while 47 stocks remained unchanged.

Turnover on the premier bourse rose significantly, increasing by 23% to Tk604 crore, indicating improved participation compared to the previous session.

However, market sentiment remained cautious as investors continued to weigh the implications of the ongoing geopolitical tensions in the Middle East.

Market analysts believe that while the day's recovery is a positive signal, the overall outlook remains uncertain.

Continued volatility in global energy markets and geopolitical developments are likely to keep investors cautious in the near term, with market direction depending on both external factors and domestic economic stability.

According to EBL Securities, the market regained some recovery momentum following the earlier selloff, supported by bargain hunting in the final trading hour.

For most of the session, indices moved sideways as both buyers and sellers remained active, reflecting uncertainty among investors.

The brokerage noted that renewed buying interest toward the close helped drive a broad-based price recovery.

Several heavyweight stocks played a key role in pulling the indices upward. Major contributors included BRAC Bank, Square Pharmaceuticals, British American Tobacco Bangladesh, Pubali Bank PLC, and Eastern Bank PLC.

On the sectoral front, engineering stocks dominated trading activity, accounting for 13.6% of total turnover, followed by pharmaceuticals at 12.7% and banking at 11.1%. Among individual stocks, ACME Pesticides Limited led the turnover chart, alongside Orion Infusion Limited, Sunlife Insurance Company Limited, and Lovello Ice-cream PLC.

Most sectors posted gains during the session, reflecting a broad-based recovery.

Mutual funds emerged as the top-performing sector with a 3.7% return, followed by general insurance at 3.1% and life insurance at 2.8%.

However, some sectors remained under pressure, with services declining by 1.0%, telecommunications by 0.7%, and cement by 0.2%.

Top gainers of the day included several mutual funds and manufacturing companies, while losses were concentrated among textile and smaller-cap stocks, indicating selective profit-taking in certain segments.

Meanwhile, the Chittagong Stock Exchange presented a mixed picture.

The CSCX index fell by 16 points to 9,101, while the CASPI index declined by 39 points to 14,914. However, turnover at the port city bourse increased by 6% to Tk20 crore.

Akij Food & Beverage Limited, one of the largest beverage conglomerates in Bangladesh, has secured approval from the stock market regulator to issue a Tk500-crore zero-coupon bond, aiming to repay existing loans and diversify its funding sources.

The Bangladesh Securities and Exchange Commission approved the move at a commission meeting held today (25 March) at its headquarters, allowing Akij Food to raise funds through the bond at face value.

According to a press release of the commission, the bond will be unsecured, non-convertible, and fully redeemable, with a tenure ranging from six months to a maximum of five years.

Given the nature of a zero-coupon bond, Akij Food & Beverage will raise approximately Tk388 crore from the capital market and use the entire amount to repay existing loans. However, the company will repay Tk500 crore to investors upon maturity, according to sources involved in the bond issuance.

The bond will be issued through private placement to banks, non-bank financial institutions (NBFIs), insurers, institutional investors, and high-net-worth individuals. The face value of each unit of the bond is Tk10 lakh.

Sena Insurance PLC will act as the trustee, while North Star Investment (BD) Limited will serve as the fund arranger.

According to its website, Akij Food began its journey in 2006 and has since become the largest beverage conglomerate in Bangladesh. It is also the highest taxpayer in the country's beverage sector.

The company offers a diverse range of products, including carbonated soft drinks, mineral water, fruit juices, snacks, and dairy products. Its portfolio includes several leading brands such as Mojo, one of the highest-selling cola brands; Frutika, one of the most popular juice drink brands; and Speed, one of the top carbonated beverage brands in terms of both value and volume across all CSD categories.

Despite its strong and stable market position, Akij Food has so far remained absent from the capital market for long-term fundraising, as its solid reputation has enabled it to secure bank financing with ease.

After repeated efforts, capital market intermediaries have finally facilitated the company's entry into the market through this bond issuance.

Sources said that over the past five years, Akij Food's business has grown rapidly amid rising demand. In the 2024-25 fiscal year, its gross profit exceeded Tk400 crore, while its operating profit stood at over Tk200 crore as of June 2025, according to data seen by The Business Standard.

In comparison, in FY21, the company recorded a gross profit of around Tk200 crore and an operating profit of Tk60 crore.

An official from the fund arranger, speaking on condition of anonymity, told this newspaper, "The business size and market presence of Akij Food are significant, and it continues to grow steadily. However, the company has been reluctant to raise funds from the capital market, as it can easily obtain bank loans to run its operations and expand capacity."

According to its website, the company exports its products to more than 47 countries across Asia and Africa, including Malaysia, the UAE, Qatar, Kuwait, Singapore, India, Sri Lanka, South Africa, Senegal, Somalia, and Canada.

The share of defaulted loans in the banking sector for loans has risen to over 31% in the past year.

The central bank published a banking "update" report this month, which shows that by the end of the December quarter, the default rate for loans stood at 31.20%, up from 19.90% during the same period the previous year.

In monetary terms, a 31.20% default rate for such large loans amounts to Tk5,54,486 crore.

According to data from Bangladesh Bank, the increase is largely due to the adoption of international standards for loan classification starting in 2025. Under the revised rules, loans not repaid within a specified period are considered overdue, and if unpaid for more than 90 days, they are classified as defaulted, down from the previous threshold of 180 days. This stricter 90-day rule has contributed to the rise in defaulted loans.

A senior central bank official said that counting loans as defaulted after 90 days has increased the volume of non-performing loans since last year. However, due to various policy support measures introduced by Bangladesh Bank toward the end of 2025, the level of defaulted loans declined slightly in the December quarter compared to September.

One such measure allows banks to write off bad loans earlier. Previously, loans could only be written off after remaining classified as bad for two consecutive years. Under the new framework, write-offs can occur sooner.

Bangladesh Bank data shows that the default rate for loans stood at 36.30% at the end of September.

Another senior official noted that many institutions have restructured their defaulted loans following policy support from the central bank. As a result, a significant amount has been removed from the default list; otherwise, the December figure would have been even higher.

Bankers say the rise in defaulted loans over the past one and a half years reflects the exposure of previously hidden bad loans. The practice of showing loans as regular without actual repayment is no longer allowed.

They also noted that foreign audit firms have reviewed loan portfolios of several banks. In particular, the five Islamic banks undergoing consolidation – now merged into a single entity – have seen a sharp increase in defaulted loans.

According to bankers, the current situation reflects years of irregularities, fraud, and corruption in the banking sector during the Awami League government's 15-and-a-half-year tenure. Major groups such as S Alam Group, Beximco Group, Nasa Group, Bismillah Group, and Hall-Mark Group, along with scandals involving BASIC Bank, have contributed to the rise in defaulted loans.

Islamic banks have been the most affected, though several conventional banks have also experienced major loan irregularities.

The Ministry of Health has instructed the country's pharmaceutical industry to explore alternative sources for importing raw materials to ensure uninterrupted medicine supply amid ongoing conflict in the Middle East and global uncertainties.

The directive was issued as part of precautionary measures to prevent disruptions in drug production due to potential supply chain shocks triggered by geopolitical instability, according to officials concerned.

The government has particularly urged the Bangladesh Association of Pharmaceutical Industries to reduce overreliance on a single region, especially China and India, for importing Active Pharmaceutical Ingredients (APIs), and instead identify other potential sourcing countries.

The decision came at an emergency meeting titled "Preparedness for potential health risks due to the ongoing war in the Middle East," held at the health ministry today (28 March). The meeting was chaired by Health and Family Welfare Minister Sardar Md Sakhawat Husain.

Officials at the meeting noted that the conflict in the Middle East could disrupt global supply chains, posing risks to the country's pharmaceutical production and distribution systems.

In this context, stakeholders were asked to take immediate and effective measures, including identifying alternative sources for API imports, as part of advanced preparedness to face any potential crisis.

The pharmaceutical industry body has also been requested to regularly update the Directorate General of Drug Administration (DGDA) on the progress of steps taken in this regard.

Bangladesh lost an estimated $68.3 billion through trade-related illicit financial flows between 2013 and 2022, according to a report by Global Financial Integrity released on Thursday (26 March).

Trade misinvoicing involves deliberately falsifying the value or quantity of imports and exports to evade taxes, shift profits, or transfer capital abroad, report said.

The report finds that Bangladesh is among the top 10 countries in developing Asia in terms of total trade value gaps.

In Bangladesh's case, a significant portion of the illicit flows is linked to trade with advanced economies. The report estimates that around $33 billion of the total gap occurred in transactions with countries such as the United States and those in Europe.

The findings suggest that Bangladesh's exposure is not limited to regional trade but is tied to global supply chains, particularly in export-oriented sectors and import-dependent industries.

Compared to other South Asian countries, Bangladesh's losses are substantial but remain far lower than India's, which recorded more than $1.06 trillion in illicit trade flows over the same period.

Sri Lanka, by contrast, recorded a smaller volume of about $24 billion in trade gaps with advanced economies, though its economic vulnerability amplifies the impact of such leakages.

Across developing Asia, trade-related illicit financial flows reached an estimated $1.69 trillion in 2022 alone, underscoring the scale of the challenge.

Major economies such as China, Thailand and India account for the bulk of these flows, though the problem spans countries of all sizes.

The study said, such practices remain deeply embedded across Asian economies, with no clear sign of decline over the past decade.

When the money market is already stressed by high government borrowing, newly introduced programmes such as the Family Card and farm loan waivers are likely to create additional fiscal pressure, potentially crowding out the private sector.

The extra spending on social programmes may come at the cost of higher inflation, as low revenue earnings will prompt the government to source funds from banks, raising interest rates and increasing business costs.

A senior Bangladesh Bank executive said that in this situation, the government has been aggressively seeking external funding sources to reduce borrowing pressure on the domestic market.

Government borrowing already grew nearly 30% year-on-year in January, surpassing the monetary target of 21.6% set for FY26 by Bangladesh Bank. The call money rate, which fell below the policy rate of 10% at the beginning of March, surged above it again amid rising import costs following the Iran war.

For example, average call money rates for short notice loans jumped to 10.50% on 16 March from 9.85% on 5 March, central bank data shows. Meanwhile, the dollar exchange rate, which had remained stable for months, rose to nearly Tk123 from Tk122.30 in just two weeks in March.

Bangladesh Bank has allowed the taka to depreciate, prioritising the protection of foreign exchange reserves amid rising import costs. Faster taka depreciation will directly affect inflation, which began rising in February, exceeding 9%.

The senior Bangladesh Bank executive told The Business Standard that rates for treasury bills and bonds are expected to rise soon, as the government will need to borrow more to fund newly introduced social programmes and cover rising energy bills.

He added that government borrowing is likely to increase significantly in May and June when the programmes are implemented on a full scale. "The government can meet the demand from both domestic and external sources," he said.

Among domestic sources, borrowing will come through treasury bills, bonds, and savings instruments, as the central bank is not planning to print money. Higher treasury bills and bond rates will influence market lending rates, which will ultimately impact inflation, he added. Central bank data shows inflation, which had eased for a few months, began rising again in February, surpassing 9%.

The government may consider revising the ceiling of savings instruments from the existing Tk60 lakh, said the executive, who wished to remain anonymous. However, sourcing foreign funds is the better option to ease liquidity stress and maintain balance in the money market, he added.

In this context, the government is emphasising the inflow of foreign loans from India and China, Bangladesh's major lenders, to meet the additional demand, said a senior Bangladesh Bank official.

The government has already begun addressing issues surrounding projects financed under India's line of credit (LoC) and the resumption of Export Credit Agency (ECA) support for capital machinery imports from China, which had stalled.

Over the past two years, the government has largely relied on bank borrowing to meet operational costs due to low foreign fund inflows. The fuel price surge following the Iran war intensified the funding crisis, prompting the government to seek foreign sources.

Prime Minister's Economic and Planning Adviser Rashed Al Mahmud Titumir said the government is reallocating funds from various sectors and considering low-interest loans from international development agencies to ensure sufficient fuel imports.

Speaking to journalists on 15 March, he added that the government is also exploring support from institutions such as the IMF and World Bank.

Amid the funding crunch, the government recently launched the pilot phase of the Family Card programme, under which at least 40,000 families will receive benefits during the four-month trial.

When the programme runs in full swing, providing Tk2,500 per month to two crore beneficiaries by 2030, it will cost about Tk5,000 crore per month, roughly Tk60,000 crore annually, according to a study of think-tank Research and Policy Integration for Development (RAPID).

The newly introduced farm loan waiver programme will cost approximately Tk1,550 crore from the budget. The Cabinet approved a proposal on 26 February to waive agricultural loans of up to Tk10,000, including accrued interest, benefiting around 12 lakh farmers in line with the government's Election Manifesto 2026.

Expert views

Zahid Hussain, former lead economist at the World Bank's Dhaka office, said Bangladesh cannot navigate heightened global uncertainty with business-as-usual budgeting, yet crude austerity is not the answer.

"The challenge is to spend smarter. The tax system collects too little from those most able to pay and remains overly dependent on trade taxes. Widening the net through digital invoicing, stronger compliance among large taxpayers, and fewer discretionary exemptions would strengthen revenues without raising rates," he said.

The economist added that deficit financing is becoming more difficult. External borrowing is costlier in a risk-averse world, while excessive domestic borrowing risks crowding out private investment. Bangladesh cannot rely indefinitely on expensive bank borrowing or short-term instruments to close structural gaps.

Ezazul Islam, director general of the Bangladesh Institute of Bank Management (BIBM), said the new government will need substantial funds in the coming days to implement the new pay scale for government employees and social programmes like the Family Card, farmer support, and agriculture loan waivers.

He warned that continued high borrowing would increase the debt burden when the debt-to-GDP ratio is already 40%, and inflation will not ease as expected. The government now faces two options: compromise traditional development projects like roads and transport to reduce budgetary pressure, or increase foreign borrowing. Major sources of foreign borrowing include the IMF, Asian Development Bank, World Bank, and Islamic Development Bank, which the government has already begun contacting.